Capital Gains Tax Changes in the 2026–27 Budget: What Property Investors Need to Know

The Federal Government’s 2026–27 Budget introduces major reforms to Capital Gains Tax (CGT) — the biggest shift since the 50% discount was introduced in 1999. These changes affect how investors calculate gains, structure their portfolios, and plan long‑term exit strategies. 

This article provides a complete, standalone explanation of the new CGT rules, including timelines, tables, investor scenarios, and practical implications. It is important to note that these changes are not yet legislated. It also links to our companion article on Negative Gearing Reform, and our Pillar Post that covers both reforms in one place.

1. Overview: What Is Changing With CGT?

From 1 July 2027, the current 50% CGT discount for assets held more than 12 months will be replaced with a new system based on: 

1. CPI Indexation

Your cost base will be adjusted for inflation, similar to the pre‑1999 system. 

2. A 30% Minimum Tax on Real Gains

Regardless of your marginal tax rate, you will pay at least 30% tax on the real (inflation‑adjusted) gain. 

3. Transitional Rules

Gains accrued before 1 July 2027 still receive the 50% discount. 

4. Special Rules for New Builds

Investors in new builds can choose the method that gives them the best outcome.

2. Timeline of CGT Reform

1. Understand current CGT rules

Until 30 June 2027, investors receive a 50% CGT discount on assets held for more than 12 months.

2. Prepare for transitional split

From 1 July 2027, gains must be separated into pre‑ and post‑reform periods, requiring accurate records and valuations.

3. Apply new CGT method

Post‑1 July 2027 gains use CPI indexation and are subject to a 30% minimum tax on real gains.

4. Choose method for new builds

Investors selling new builds can select either the 50% discount or the new indexation method, whichever is more favourable.

3. Comparison: Current vs New CGT System

4. How the Transitional Rules Work

If you purchased your property before 1 July 2027, your capital gain will be split: 

Part A — Gain accrued before 1 July 2027 

• Receives the 50% CGT discount 

Part B — Gain accrued after 1 July 2027 

• Uses CPI indexation 

• Subject to 30% minimum tax 

Do you need a valuation? 

Yes — if you want to maximise accuracy and minimise tax. You can: 

• obtain a valuation at 1 July 2027, or 

• use an ATO‑approved formula to apportion the gain

5. Investor Scenarios

Scenario 1: Selling a Property Purchased in 2020 

• Gains from 2020–2027 → 50% discount 

• Gains from 2027–sale → indexation + minimum tax 

• Depreciation schedules help establish accurate cost bases 

Scenario 2: Selling a Property Purchased in 2028 

• Entire gain taxed under new rules 

• No 50% discount 

Scenario 3: Selling a New Build Purchased in 2029 

You can choose: 

• 50% discount, or 

• Indexation + minimum tax 

Whichever results in less tax.

6. How Depreciation Schedules Reduce CGT

Depreciation schedules help to accurately: 

• Document capital works 

• Record improvements 

• Establish accurate cost bases 

• Reduce taxable gains 

• Support transitional valuations 

This is especially important under the new indexation system. 

7. Related Articles 

• Read the Negative Gearing Reform Article (companion piece) 

• Read the Pillar Post covering both reforms 

With expertly prepared Australian depreciation schedules for all property types, Capital Claims continues to support investors, accountants, and advisers with reliable, professional service. Contact our team on 1300 922 220.